R&D, Renewable Energy, and Sustainable Human Development: What a 2025 Study Reveals

A digest of Ali (2025), International Journal of Energy Economics and Policy

Climate change and uneven energy access have pushed research and development (R&D) to the centre of energy policy debates in the East African Community (EAC). This study asks whether technological progress, used here as a proxy for R&D, and renewable energy consumption actually move the needle on sustainable human development across six EAC countries: Burundi, the Democratic Republic of the Congo, Kenya, Rwanda, Tanzania and Uganda. Using panel data from 1996 to 2021 and a battery of second-generation econometric estimators, the paper finds a relationship that is more complicated, and in places more counterintuitive, than its own conclusion suggests.

The study covers 1996–2021, giving 155 annual observations across 6 EAC countries, and uses 4 estimators: FGLS, PCSE, Driscoll-Kraay and FMOLS. The renewable energy consumption (REC) elasticity on SDI in the direct FGLS model is −0.454, and the R² of the direct SDI models is about 81%.

Article at a Glance

The article is "The Role of Research and Development in Renewable Energy Consumption - Sustainable Human Development Nexus: Evidence from EAC Member Countries," by Ali Yassin Sheikh Ali, Faculty of Economics, SIMAD University, Mogadishu, Somalia. It was published in the International Journal of Energy Economics and Policy, Vol. 15, No. 3, pp. 262–275 (EconJournals; open access, CC BY 4.0), in 2025 (received 28 November 2024; accepted 10 March 2025). Its research area is energy and environmental economics and sustainable development, and its study context is the East African Community (Burundi, Congo DR, Kenya, Rwanda, Tanzania and Uganda), using an annual panel for 1996–2021. The method is panel econometrics: FGLS and PCSE main estimators, Driscoll-Kraay and FMOLS robustness checks, Dumitrescu-Hurlin causality, and country-level pooled OLS. The DOI is https://doi.org/10.32479/ijeep.18782.

The Research Problem

EAC nations face a familiar bind: renewable energy is widely seen as essential for climate goals and human development, but its adoption in the region has been slow. The paper points to inadequate funding for research and development, limited technological capacity, and weak policy frameworks as the main obstacles, alongside continued heavy reliance on inefficiently used biomass. While the renewable energy–human development link has been studied elsewhere, the author argues that the specific contribution of R&D to that relationship in the EAC context has not been directly examined.

Research Objective

The paper sets out to estimate how technological progress (used as the R&D proxy, TECH) and renewable energy consumption (REC) relate to Sustainable Human Development (SDI, a Hickel-style ecological-efficiency index) across EAC countries, controlling for GDP, gross capital formation (GCF) and inflation. A second, interactive model adds a REC × TECH term to test whether renewable energy consumption and technological progress reinforce one another. No formal hypotheses are stated beyond the standard test of no long-run relationship.

How the Study Was Conducted

A panel of six EAC countries over 1996–2021 (155 observations) combines World Bank macroeconomic indicators (GDP, GCF, inflation, renewable energy consumption, technological progress) with the UNDP's Human Development Index and Hickel's Sustainable Development Index as the outcome measure. All variables are logged, so coefficients read as approximate elasticities. Cross-sectional dependence tests confirmed that shocks are correlated across the six countries, which shaped the choice of estimator.

The analysis had six stages. In stage 01, Dependence, CD tests confirmed significant cross-sectional dependence across all variables (P = 0.000). In stage 02, Unit Roots, CIPS and CADF tests showed a mix of stationary and non-stationary series at levels, all stationary at first difference. In stage 03, Cointegration, Kao, Pedroni and Westerlund tests confirmed long-run equilibrium relationships among the variables. In stage 04, Estimation, FGLS and PCSE models were each run as a direct specification and an interactive one with a REC × TECH term. In stage 05, Causality, Dumitrescu-Hurlin panel causality tests were run across all pairs of SDI, REC, TECH, GDP, GCF and inflation. In stage 06, Robustness, Driscoll-Kraay standard errors, FMOLS re-estimation, and separate pooled OLS runs for each country were used.

Key Findings

The long-run coefficients come from the FGLS (direct), FGLS (interactive) and PCSE (direct) models, as reported in Table 6 of the article. Significance is marked at 10% (), 5% () and 1% (). Renewable energy (REC) has −0.454*** in FGLS (direct), −1.137*** in FGLS (interactive) and −0.454*** in PCSE (direct). Technological progress (TECH) has 0.032***, −0.471* and 0.032***. GDP has 0.044***, 0.054*** and 0.044***. Capital formation (GCF) has 0.042**, 0.032 (not significant) and 0.042**. Inflation has 0.021***, 0.020*** and 0.021***. The REC × TECH interaction term appears only in the interactive model, at 0.111*, and is not included in the two direct models.

1. Renewable energy consumption is negatively associated with sustainable development. Across FGLS and PCSE, a 1% rise in renewable energy consumption is linked to roughly a 0.45% fall in SDI in the direct model, and over 1% in the interactive model. The Driscoll-Kraay and FMOLS robustness checks confirm the same negative sign, which the author reads as a sign of transitional inefficiencies rather than renewable energy itself being harmful.

Reading note: This aggregate negative coefficient masks sharp country differences. The pooled OLS run separately by country (Table 7) shows renewable energy positively associated with SDI in Congo DR and Kenya, but strongly negative in Uganda (−15.27) and negative in Rwanda and Tanzania. A single regional coefficient hides very different national stories.

1. Technological progress has a small positive effect that reverses once interacted with renewable energy. In the direct model, a 1% rise in technological progress raises SDI by about 0.03%. But in the interactive model the standalone TECH coefficient turns negative and only marginally significant, while the REC × TECH interaction term is positive (0.111) and significant in the PCSE model. This suggests technological progress supports sustainable development mainly through its interplay with renewable energy uptake, not on its own.

2. Economic fundamentals (GDP, capital formation and inflation) line up with sustainable development. GDP and gross capital formation are consistently positive across FGLS and PCSE, and inflation is positive and significant in every specification, which the author attributes to the moderate-inflation, growth-supportive conditions typical of the sample period rather than instability.

3. Causality runs in both directions between SDI and its main determinants. The Dumitrescu-Hurlin test finds that SDI Granger-causes renewable energy consumption, technological progress, GDP, capital formation and inflation, and that each of those variables also Granger-causes SDI (except that technological progress does not significantly cause renewable energy consumption). The relationship, in other words, looks two-way rather than a simple one-directional driver.

What the Study Contributes

The contribution is chiefly empirical: a six-country EAC panel spanning 26 years, analysed with four complementary estimators (FGLS, PCSE, Driscoll-Kraay, FMOLS) plus country-level and causality breakdowns, a more thorough robustness check than most single-method studies in this literature. The paper argues that R&D (proxied by technological progress) matters for sustainable development mainly through its synergy with renewable energy adoption, and calls for EAC governments to prioritise R&D funding, supportive regulation, workforce training and regional cooperation on renewable energy technology.

Important Limitations

Identified by the author: Reliance on secondary data from the World Bank, UNDP and Hickel's SDI series may carry the biases of those original sources. Findings are specific to the EAC, so generalising to other regions with different socio-economic contexts calls for caution.

Skilful cautions arising from the study design: Technological progress (TECH), not R&D expenditure, is the variable actually used, so the paper's framing as "R&D" is a proxy relationship, not a direct measure of R&D spending or output. In addition, 155 observations across 6 countries is a modest sample for a six-variable panel model with an added interaction term. The negative aggregate REC coefficient conflicts with the positive country-level results in Congo DR and Kenya (Table 7), so pooled and country-level estimates should be read together, not the pooled figure alone. Two-way Granger causality between SDI and REC/TECH means the negative association could partly reflect reverse causality, with lower sustainable development limiting effective renewable energy uptake, rather than only the reverse. Finally, the correlation matrix (Table 2) already shows REC negatively correlated with GCF and TECH, so multicollinearity may be shaping the regression coefficients.

Why This Research Matters

EAC governments are actively expanding renewable energy capacity as part of their climate and development strategies. This study's message, that renewable energy consumption alone does not guarantee gains in sustainable development, and may even coincide with short-term declines, unless paired with technological progress, is directly relevant to how those investments are sequenced and funded. For researchers, the six-country, 26-year panel with four estimators is a useful template for testing similar questions in other developing regions.

Skilful Research Insight

Editorial commentary, not a finding of the study. Three things stand out. First, the headline negative REC coefficient and the positive country-level results in Congo DR and Kenya point in different directions. The regional average obscures real variation, and policymakers in any single country should look at their own numbers, not the pooled estimate. Second, the paper labels its technological-progress index "R&D", but no R&D expenditure or patent data enters the model; future work using direct R&D spending figures would test the paper's central claim more directly. Third, the REC × TECH interaction term, positive and significant in the PCSE model, is arguably the paper's most interesting result, since it implies renewable energy pays off for sustainable development specifically where technological capacity is also rising, a nuance the abstract does not foreground.

Read the Original Research

The original article is "The Role of Research and Development in Renewable Energy Consumption - Sustainable Human Development Nexus: Evidence from EAC Member Countries," published in the International Journal of Energy Economics and Policy, 15(3), 262–275 (2025), by Ali Yassin Sheikh Ali. Its DOI is https://doi.org/10.32479/ijeep.18782, and the publisher/journal page is EconJournals, www.econjournals.com (open access, CC BY 4.0). Skilful summarises; all findings belong to the original authors.

SEO Information

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